AT&T Admits Size Helped Get iPhone Deal in Senate Hearing

Posted by at 12:06 pm on May 11, 2011

The US Senate hearing on Wednesday tripped up AT&T in its attempts to defend its proposed buyout of T-Mobile. When asked by Senator Al Franken if AT&T chief Randall Stephenson thought the iPhone exclusive could have gone to a regional carrier over AT&T, the CEO admitted that it was “not as likely” that Apple would have gone for a smaller carrier over a large national provider like his own. He unusually insisted that the iPhone wasn’t responsible for significant growth even though he had repeatedly used it as an example of how data prices had lowered due to the iPhone existing.

Europe was an example of how this wasn’t a major factor, he said, saying that Apple had “spread it apart” in the continent.

Cellular South CEO Victor Meena echoed sentiments from Sprint and believed that AT&T was using its “market power” to get exclusives like the iPhone. Democrat Senator Klobuchar joined in and pointed to hard statistics showing that AT&T had a disproportionately large amount of the smartphone market and that having 44 percent of cellphone subscribers meant it could almost certainly get any exclusive it wanted.

Stephenson dodged answering questions of the importance of a given handset and simply said he was “not worried” with 600 devices on the market. Exclusives like the iPhone helped get the phones to market faster by streamlining hardware development, but he tried to assuage the Senate by saying that the US was “moving away” from long-term deals like the four-year deal that locked the iPhone to AT&T.

The combined AT&T statements directly contradicted the carrier’s own repeated, publicly observable promotion of the iPhone as important to its network. Apple’s hardware has been the most popular smartphone on AT&T virtually since its introduction in 2007, and AT&T has almost always broken out iPhone sales from the rest of its smartphone sales every quarter, often explicitly to highlight how rapidly the company was growing due to its iPhone exclusive.

Stephenson’s mention of Europe also ignored that iPhone exclusives ended much more quickly in the region, in France’s case by regulation. The European market is also much more equally balanced with Orange, O2, T-Mobile, Vodafone and others all more even. In the US, either AT&T or Verizon by itself is larger than Sprint, T-Mobile, and all regional carriers combined.

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